The development of new social media platforms seems to occur at an increasingly breakneck pace and Meta’s new Twitter competitor, Threads, is no exception. The freshly released platform ushered in 70 million sign-ups in just its first full day since its public debut Wednesday night, according to Meta CEO Mark Zuckerberg Friday.
This explosive growth is aided by the fact that Threads is connected to an extremely popular existing social network, Meta’s Instagram. The connection between the two worlds allows users to sign up with their existing handles on Instagram. This allows them to preserve some of their following as others sign up for the app.
“Meta only needs 1 in 4 Instagram users to use Threads monthly for it to be as big as Twitter,” Jasmine Enberg, principal analyst at Insider Intelligence, said in a statement. Twitter reported nearly 238 million monetizable daily active users in its most recent quarterly earnings report as a public company last summer.
Keep in mind, this growth is only a fraction of the potential for the platform. Threads has yet to launch in Europe due to some regulatory challenges that must be dealt with first.
As to be expected, competitors such as Twitter are feeling some pressure.
Twitter owner Elon Musk has accused Meta of “unlawful misappropriation” of trade secrets, an attempt to discredit the fledgling platform.
“No one on the Threads engineering team is a former Twitter employee,” Meta’s communications director, Andy Stone, wrote on Threads in response to the letter. “That’s just not a thing.”
Threads Must Differentiate Itself From Twitter
To increase competition or even dominate Twitter, Threads must show that it can keep users engaged and returning. I shouldn’t rely on growth and affiliation with Meta’s existing technology and community.
Twitter is notorious for its affiliation and usage by journalists, politicians, and academics as a breaking news source. Meta’s Threads may therefore downplay politics to focus more on pop culture.
“Newshounds and avid Twitter loyalists aren’t likely to defect to Twitter. And Meta will need to keep Threads interesting to maintain the momentum once the novelty wears off,” Enberg wrote. “It’s also not a given that people will use Threads to keep up with news and world events like they do on Twitter. And the culture will be different. But that could work to Meta’s benefit. Even the most engaged Twitter users are fed up with the constant chaos and ad hoc changes. And Threads could offer a nice reprieve.”
For investors looking to use ETFs to play the new explosive growth in Threads, there are a few options to consider, including the Communication Services Select Sector SPDR Fund (XLC A-), the Vanguard Communication Services (VOX B), MicroSectors FANG+ ETN (FNGS C), and the Fidelity MSCI Communication Services ETF (FCOM B).
For more news, information, and analysis, visit VettaFi | ETFDB.
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